McKinsey Management Infrastructure

1

Management Infrastructure


Fast-forward and perfect your next transformation

MMP Global ConferenceVienna, July 21 - 23, 2003

Manufacturing PracticeManufacturing Practice

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Agenda

•Context

•Performance management

•Organisation

•Continuous improvement infrastructure

•Next steps

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The EU OS&E practice has developed a three part model to explain how to transform clients operations

Operating System


Mindsets & Behaviour

Sustainable future state

Currentstate

The processes, organisation and related infrastructure required to influence and enforce the operating system to ensure business goals are achieved

Assets and resources configured and utilised to deliver customer value with minimal waste, low variability and high flexibility

Performance-oriented leadership and organisation-wide behaviour to sustain an institutionalised continuous improvement ethic

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A knowledge initiative was launched last September to consolidate and develop the firm’s materials in management infrastructure

Origin McKinsey material, Sep 2002

Operating System

ManagementInfrastructure

Mindsets and Behaviour

• Toyota • Comprehensive suite of Industrial Training Presentations

• Guidelines for application to new environments (e.g. retail, heavy industry)

• McKinsey consultants

• McKinsey Organisation Practice

• NA People Systems initiative

• “MMP Common knowledge” of performance management

• McKinsey (Practical Change Management initiative)

• Client discussion documents

• Change Journey Workshop

• Front line diagnostic material

Focus of this initiative

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Five elements of management infrastructure have been defined

What this is . . .• Definition and

alignment of the key management infrastructure elements needed to effect and support a lean production process

What this is not . . .

• A definition of every management process needed to run a manufacturing business

Process to develop

operational skills and

capabilities

Continuous improvement infrastructure

Performance management

system

Alignment of the

operations organisation

structure

Management of key

functional support

processes*

Management infrastructure

Focus of this initiative to date

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The elements addressed so far concern questions that are critical to the effectiveness of a production system transformation

• What is the right role profile for the front line leader?

• How should front line teams link organisationally to the top management?

• How should front line support be organised?

• What is the right size/structure of the front line team?

• How should tracking and reporting systems be designed?

• How should targets be set and deployed?

• How should performance review processes be run?

• What are the right metrics to track performance of operations and people?

• What is the best way to codify the production system and improvement tools required?

• How should incentive systems be set up and run?

• How should the CI office progress over the change journey?

Operations organisation Performance management CI infrastructure

• How should a CI office be set up and run?– Size– Skills– Relationship to line

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Skills and capabilities

The remaining elements of management infrastructure involve other questions that are equally important

• How should management skills be defined and captured?

• What processes and programs are needed to provide operators and managers with the skills to do the job?

• How should operating skills be defined and captured?

• What changes to the financial systems and processes – especially cost accounting and budgeting - are needed to align to the lean operating system?

• How should HR processes – resource planning, labour scheduling, attendance etc - be provided?

• How should the quality system be set up and run?

• What IT systems are required to support the operating system?

Functional support processes

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Operations organisation


CI infrastructure

Initial documents are now available for the first three elements

Long and short diagnostic toolsBest practice compendium

Compendium of design criteria

Compendium of design criteria

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2.1 Diagnose overall flow

3.1 Design flow 4.1 Implement flow 5.1 Refine flow

2.2 Diagnose process effectiveness

3.2 Prioritise stabilization/improvement

4.2 Run focused improvement initiatives

5.2 Re-establish priorities

2.3 Diagnose performance management

3.3 Design performance management

4.3 Establish and coach performance reviews

5.3 Monitor reviews

Flow

TAK


Main application ofdocuments

The material has been particularly helpful in the diagnostic phases of pilot transformations at sandvik

3. Design high-level target system

4. Implement 5. Plan refinement2. Diagnose current state1. Start-up

2.4 Diagnose organisation

3.4 Design target organisation

4.4 Make changes to organisation

5.4 Redevelop changesOrganisation

Documents have helped to:• Convey best practice• Provide template pages

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Sandvik is a Swedish industrial company who has engaged the firmon a major production transformation initiative

Size

Products

• USD1bn sales

• Metal products– Steel ingots/feedstocks– Tubes– Strip– Wire

Sandvik Materials Technology Wire Business Unit

• USD 250 m sales

• Flat profiles (e.g. piston rings)

• Welding electrodes

• Spring wire

• Other (e.g intimate piercing)

Engagement

• Pilot transformations in all businesses

• Central team of 'navigators' built for rapid deployment of program

• Flat pilot transformation

• Weld pilot transformation

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Agenda

•Context


•Organisation


•Next steps

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Operations

People

System set-up and definition Dynamic management of performance

KPI definitionReporting formats and frequency

Data collection, information management and report production

People Management Process Definition

Motivation Systems DesignObjective setting/personal

plan development

Target setting

Corrective action

planning

Improvement planning

Implemen-tation

Performance review

Implemen-tation

Performance review

Manage rewards/ consequences

The performance management model was developed to bring together best practice thinking in the firm

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The 'static' elements of the operating system model prescribe how the systems should be initially set up and periodically updatedOPERATIONS SYSTEM SET-UP AND DEFINITION

a. Linkage of KPIs to ROCE using trees

b. Top level KPI definition

c. Cascade of KPIs through the organisational hierarchy

d. Use of supporting input or process metrics

KPI definition

a. Hierarchy of review meetings

b. Real time shop floor process control

c. Real time shop floor performance tracking

d. Front line performance reporting

e. Area management performance reporting

f. Operations top management reporting

Reporting formats and frequency

Data collection, information management and report production

a. Data collection efficiencyb. Data warehousing,

storage and processing efficiency

c. Report production processes

d. Performance management IT infrastructure

e. Alignment of financial processes to match operations organisation

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Production

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Production Potential

Losses

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.01

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(m

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Planned losses Unplanned losses

For example, the use of input or process metrics is recommended to help account for performance gaps

EXAMPLE

Exceptionally poor performance in June is explained by a planned shutdown which is only clear by looking at the driver (losses) as well as the result (production).

Similarly poor performance in July is caused by unplanned losses and is, therefore, of much more concern. This would be a target for further investigation and root cause problem solving

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Risks & Opportunities are identified under each element, capturing issues that arise from performance review and related actions

Measures are displayed by performance element with one driver and one result measure per element

Examples

• Key metrics for each performance element are displayed against target with a short trend history (e.g. one week)

Target driven

Accessible• Boards are located near

to the shop floor and are manually updated for quick and easy maintenance

Clear• Simple display that

clearly indicates what the measures are and is easy to understand for someone new to the area

Balanced• Metrics selected are a

balance of results and drivers

Controllable• Metrics selected can be

influenced within the reporting cycle by the team reviewing performance

Guidelines and examples for front line performance reporting have been detailed

EXAMPLE

SHORT-RUN REVIEW AT THE FRONT LINE NEEDS TO BE SUPPORTED BY A SIMPLE DISPLAY OF KEY METRICS

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Imple-men-tation

Target settinga. Definition of highest

level objectives to deliver business strategy

b. Cascade of objectives through the KPI hierarchy

Improvement planninga. Developing improvement

actions for the delivery of business targets

b. Documenting improvement plans

c. Integrating corrective action plans into mainstream improvement plans

Performance reviewa. Identifying performance gaps b. Shop floor review and planning

meetings c. Area management performance

reviewsd. Operations top management

performance reviews

Corrective action planninga. Prioritising areas for improvement b. Identifying root causes of performance gapsc. Evaluating short term containment actionsd. Generating solution ideas to address root causes

and selecting prioritiese. Resetting targets within the business planning cyclef. Shop floor action tracking for problem resolution

The second section of the model prescribes how operations performance reviews should be conducted

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• Clear consequence management: Not making base targets leads to loss of job

• Appraisals take account of creativity in setting stretch targets – lack of ambition can also be punishable by sacking

• 360 degree appraisals include contribution from occupant of previous job - prevents “slash and burn” approach to achieving targets

• Great reward, both financial and development, for achieving stretch

Performance management system

• Mindset – brutally facing reality while believing in stretch

• Missing your base targets in a ‘social sin’ and you are ostracized

• Delivering stretch targets leads to ‘hero worship’

Mindsets and behavioursCapability building

•Base targets are set top down – aimed at delivering steady year-on-year improvement

•Managers at each level set their own stretch targets

•If stretch targets are achieved, they become the basis for the following year’s base targets

•The system builds in checks and counterbalances to prevent “sandbagging”

Example:

For example, targets must be set that are consistent with business strategy and corporate culture

EXAMPLE

TARGET SETTING DEPENDS ON THE SUBTLETIES OF THE MOTIVATION SYSTEM AND CORPORATE MINDSETS FOR SUCCESS

Role-modelling

Under-standing & commitment

Aligned systems &

structure

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The material includes illustrations of 'best practice' for formulating improvement plans to close gaps to targets

EXAMPLE

Level 2 TIP for focussed equipment improvement displayed with chart tracking the key measure being addressed – line downtime

Progress against the plan can be directly related to performance against the target

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a. Explicit choice of motivation levers

b. Translating choice of lever into specific policies

c. Construction of appropriate incentive packages

a.Appraisal process definition

b.Disciplinary process definition

People management process definition

Motivation systems design

The third part of the model concerns establishing systems to manage people's performance

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• “You need to believe in our ‘cult-like’ values and live by them”

Coordination and control levers ("sticks"): How senior management personally interacts to manage the business

Motivation levers (“carrots”): Levers senior managers explicitly pull to motivate the broader workforce

Typically drive business by focusing intensely on one area

Financial control and planning

Operation con-trol and planning

People-intensive focus

Incentives Opportunities Values and beliefs

Coordination and control levers Motivation levers

Level of personal focus and attention by senior management

• “We proactively put the right people in the right place by focusing on people practices”

• “Meet our tough financial goals and we won’t micromanage your operation”

• “Intrusive operational planning and tracking is the only way to ensure we are truly effective”

• “Recognize performance with money and/or non-financial rewards (including a fun and stimulating environment)”

• “Give them chances to grow into bigger roles, the freedom to shape own work content, and/or greater autonomy to act on ideas”

Description Description

Superior/ Best practices

Distinctive execution

Common practices

Often a second area is driven to “near-distinctive” level

Senior managers can set the direction of their people management system by determining the relative importance of six choices…

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Choices are dictated by the extent of problems/issues at the company

• “Sinking ships” can realistically pull only operational and incentives levers

• “Leaking ships” have more latitude and can pull any combination of financial/ operational and opportunities/ incentives

• “Smooth sailing ships” have the most latitude and can pull any combination of levers; generally, though, smooth sailing companies are already distinctive on 2 levers

Motivation levers

Incentives Opportunities Values/belief

Ope

ratio

nsF

inan

cial

Peo

ple

Co

ord

inat

ion

/co

ntr

ol l

ever

s

Smooth sailingSmooth sailing

LeakingLeaking

SinkingSinking

…although the choice may be limited by overall business performance

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Objective setting and personal development planning

Performance review

a. Effectiveness of appraisal processes

b. Identifying performance issues in real time and taking action

c. Providing coaching and development interventions

Reward and consequence management

a. Robustness of reward and consequence management

b. Linkage of performance to career development and progression

Imple-men-tation

a. Alignment of personal and operations objectives

b. Quality of objective definitions

c. Planning for personal development

The model's fourth quadrant is concerned with conducting performance appraisals

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Best practice is for performance to be explicitly linked to career progression

High performers need to be nurtured

• Retention is difficult if high performers do not feel stretched or adequately rewarded

• Know who the high performers are and tell them

• Shape the work to excite and stretch them

• Create rapid progression opportunities for those with potential

• Pay them enough to keep them

• Measure and manage retention

• Distinguish between potential and performance

• Focus senior management attention on high- potential people

• Excellent performers are hard to identify – in many companies 85% of people receive “Average” or “Above average” appraisals

• Performance rewards are so commonly awarded that they are seen by most as an entitlement

• There are no clear benefits, such as accelerated progression, for those demonstrating excellent performance and potential

• Everyone gets a similar salary increase

• Advancement mainly based on tenure rather than performance

Many companies do not sufficiently recognise excellent performance

12B. LINKAGE OF PERFORMANCE TO CAREER DEVELOPMENT AND PROGRESSION

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For example, GE has created a fluid environment for high performers among its 300,000 employees

• Objects move through a stationary bed of sand only with great difficulty. Agitation creates a ‘fluidised bed’ which allows objects to move quickly through it. The higher the rate of agitation, the more quickly objects can move

• GE continuously creates a state of agitation to reduce organisational viscosity and to allow its leaders to rise quickly through the organisation. In turn this promotes a more rapid spread of ideas and knowledge

• “The sense of urgency at GE is extreme, you feel like you’ve had a bullet fired at you, and your always running out ahead of it”

– Former GE employee

• “I just wish we were faster - I never move fast enough” – Jack Welch

Pace

• Job rotation is considered the primary vehicle for development with ‘high potential’ people rotated through quickly

• Spans of control were increased from 5-9 to 20-30

• “We try to give our very best people experiences before they are ready. We believe the payoffs far outweigh the risks”

• Leaders are evaluated on ‘Edge’, a strong bias for action

• “Your best development opportunity is your next job”

• Decisiveness is strongly encouraged and evaluated

People

Leaders

Operatingenvironment

'Fluidised bed'

EXAMPLE

12B. LINKAGE OF PERFORMANCE TO CAREER DEVELOPMENT AND PROGRESSION

GE’s operating environment is like a fluidised bed . . .

. . . stimulated and catalysed by agitation mechanisms

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A standard diagnostic has been developed which helps to assesses a client's gaps to best practice in all areas

"EPR"-like documents have been developed to rate client practices against each element

of the model

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In Sandvik the diagnostic helped to explain that ensuring access to performance data available was not enough

KPI definition

Reporting formatsand frequency

Data management

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Performance set-upROCE–KPI listKPI definitionKPI cascadeSupporting metricsHierarchy of reviewsShop floor process controlsShop floor performanceShop floor reportArea performance reportTop performance reportData collection efficiencyData processing efficiencyReport production efficiencyIT infrastructureFinancial tracking

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The diagnostic also enabled the current gap in managing performance to be discussed objectively with the client

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Target setting

Corrective actionplanning

Improvementplanning

Performancereview

Performance executionHigh-level targetsCascade targetsDevelop planDocument planCorrect planIdentify gapsShop floor reviewManager reviewTop management reviewPrioritise problemsIdentify root causesEvaluate actionsGenerate solutionsReset targetsTrack problems

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The standard template was used to propose a consistent set of performance reviews

Foreman (Gunnar)

Production head (Bengt)

Division manager

(Jan)

Monthly QuarterlyWeekly

Team

Daily

Lev

el

Frequency

Real Time

Production manager (Karin)

Team KPI board

Weekly scorecard

Monthly scorecard

Quarterly scorecard

Andon

Process Control Charts

Monthly performance

review

Weekly performanc

e review

Daily performance

review

FLAT WIRE EXAMPLE

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Standard agendas were then adjusted for Sandvik's review meetings

Daily team review Timing: 1-2 x 15 min daily

Agenda

1. Review performanceIdentify gaps to targetsComment on KPI trends

2. Identify recent problemsFor each gap to target (in descending order)

Identify main machine(s)Investigate root cause of problemLog problem and assign action if appropriate

3. Review ongoing problems For each change on problem resolution board

Summarise progress madeCommunicate changes

4. Brief discussion of extraordinary items

AttendeesProduction leader All Team MembersMaintenance, Quality, Process engineering, Planning

Input • Summary board• Problem resolution board

Meeting rules• Update board with KPIs prior to meeting• All present in meeting must speak with data

Purpose: To review the performance of the last 24 hours and direct/feedback improvement actions

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Scorecards to facilitate the weekly performance reviews were developed from a PSDC model

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Example of flat rolling daily performance board

Photos removed

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Agenda

•Context


•Organisation


•Next steps

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Organisation design principles developed in the materials were agreed with the Sandvik management team

• Numbers and roles within operating teams should be designed to support the transformed operating system

• Non-operations personnel should be organised to suit the nature of support required by the operating system

• Single point accountability along flows in business should be driven to the lowest possible level

Effective

Efficient• Numbers of non-production

personnel should be kept to the minimum required

Principle

• None at this stage

• Process engineers and maintenance organised into neighbouring support team

• Front line team leaders will be Flow Managers

Planned change at Sandvik Wire

• Numbers of non-production personnel should be kept to the minimum required

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The material prescribes a design process that starts with operating system requirements

End product

Determine foundationDetermine size and role of frontline teams

Determine size and role of subsequent levels

Determine design of functional support

Number ofmanagers in linehierarchy

Role for eachmanager

Organisation design for each support function

Stage oforganisation design

Front line team size and leader

role

Line management structure

Functional support

People and processes required

One value stream segment

Number of operators per value stream loop on all shifts

Max number of reports to front line team leader

Front line teams assigned to areas of business

Roles for front-line team leaders

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Five factors from the operating system design may shape the optimum size of the front line team

Current process stability Greater instability will require more frequent intervention and closer management attention

Complexity and variability of tasks

The greater the complexity of tasks, the greater the requirement for managing data, organising work and training operators

Criticality of quality Greater criticality of processes will require closer supervision and closer management attention

Takt time For long takt times the Cover required to relieve/assist each operator for short periods to avoid stopping line

Size of equipment and degree of automation

The greater the density of operators, the less likely it is that team formation be constrained by physical layout

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Additional strategic factors may also shape a smaller or larger front line team

Managementdevelopment

Grouping and accountability should be assigned to unbroken value stream segments wherever possible

High required pace ofcontinuous improvement

More focus is required from leader to ensure faster pace of change

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The prescribed analysis was completed at Sandvik wire, and helped to justify the target design

Front line team size

Small (<4) Large (~50)

Process stability

Complexity of tasks

Process criticality

Work content to remember

Takt time – manual CFP

Operator density

Required pace of improvement

Strategic requirement

<20%

>£10K

<1

>20%

<60s

>100hrs

100%

<£1

>100

0%

30min

<1 hour

>Daily <Monthly

<4 ~50

The analysis helped to consider relevant factors in the Wire flows

The analysis helped to consider relevant factors in the Wire flows

It helped to confirm that Wire flow managers could manage up to 20 people

It helped to confirm that Wire flow managers could manage up to 20 people

Process engineering support is required to compensate for instability of processes

Process engineering support is required to compensate for instability of processes

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The material will also now be used at Sandvik to consider the optimum nature of the support functions

Functions

Maintenance

Production Planning

Human Resource

Quality

Functions

Finance

Should we integrate the function into the front line teams?

Should the support be organised into a functional silo?

Are there models somewhere in the middle?

Questions

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THERE ARE FIVE MAIN WAYS IN WHICH SUPPORT FUNCTIONS MAY RELATE TO FRONT LINE TEAMS

5. Functional silo

Produc-tionmanager

Frontlineteam leader

Support manager

Opera-tionsteam

Supportteams

Plant manager

1. Fully-integrated into frontline team

Front lineteamleader

Opera-tionsteam

Support

2. Report via middle manager

Areamanager


Supportteamleader

Opera-tionsteam

Support

3. Report via senior manager

Produc-tionmanager


Supportmanager

Opera-tionsteam

Supportteams

4. Matrix

Produc-tionmanager


Supportmanager

Opera-tionsteam

Supportteams

Plant manager

Area manager

Area manager

Area manager

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Seven factors will affect the integration of support into the value stream

Integrated in value stream Centralised functionDesign criterion

Source:Team workshops

Interactions with frontline are not time critical

Response is required quickly to maintain production

Required responsiveness

Skills are not specialist or scarce

Scarce skill must be nurtured across multiple production areas

Specialist skills

There are enough tasks to do at the frontline to keep one person fully utilised

Not enough work content at frontline to merit a full-time position in frontline team

Utilisation

All equipment/systems local to the line or can be replicated at the line (IT systems)

Access to centralised equipment or specialist IT systems needed

Access to central systems

Degree of independence No reason for being separated from front-line

Conflict of interest if working too close with front-line

Never have to deal with front lineFrequency of interaction Interaction is critical

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The proposal for the organisation of Sandvik’s maintenance department is to report to production via the first level managers

High Low

LowHigh

Low High

HighLow

HighLow

Low High

Value stream

Central function

Rating

Interaction with line

Responsiveness to front-line

Skills nurturing needed

Deployment utilisation

Access to central equipment/systems

Independencefrom line required

Criterion

Model 1 52 3 4

2. Report via middle manager

Productionmanager

Flowmanager

Supportmanager

Opera-tionsteam

Technician

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Agenda

•Context


•Organisation


•Next steps

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The current CI material has been developed to explain how a CI team should be designed to serve three functions

Core activities Elements Importance

Building CI capability

• Transferring CI knowledge to the line

• Reinforcing improvement behaviours

• Spreads awareness of why and how to improve

• Ensures practical change takes place

Developing methodology and vision

• Codifying improvement methodology

• Creating improvement vision

• Shows people how to create improvement

• Provides a tangible and consistent target

Supporting CI implementation

• Resolving technical CI issues

• Overseeing improvement programme

• Overcomes barriers to implementation

• Maintains space through effective planning and review

For all but the smallest organisation, the line function lacks the knowledge and resources to perform these activities adequately

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The design should vary as an organisation progresses through different phases of corporate transformation

Begin Build Embed

SummaryTransformation kick-off

Deployment throughout value-stream

Continuous improvement as normal routine

ThemeDemonstrating change

Managing programme

Devolving to line

Change modelStep change; push Step change; push Incremental

change; pull

Focus areaPilot area (usually value stream)

Multiple value streams

Whole business

LeadersSenior managers with external support

Line managers with external support

Line managers with internal support

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The structure of the CI team should also develop as its role progresses

Begin Build EmbedStage

Typical CI organisation structure

Function

Group

Plant Manager

Ops External support

Line Line Model line

Change agents

Push

External support (consultancy) helps kick-start change through joint change agent team working in model line pilot area

Internal change agents deployed across the plant, supported by plant CI function. External support helps in deployment and building group CI infrastructure

CI coaching ‘pulled’ by line to help them meet targets. Improvement teams add skilled resource. External support replaced by group CI function

Group

Plant Manager

Ops

Group CI team

External support

Push

Plant CI team

Push

Line Line Line

Change agents

Change agents

Push Push

Change agents

Group

Plant Manger

Ops

Group CI team

Pull

Plant CI team

Pull

Line Line Line

Improve-ment team

Improve-ment team

Pull Pull

Improve-ment team

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The skills and capabilities within the CI organisation will also need to change for each stage

Training/facilitation/coaching

Change management

Improvement project design

Project management

Practical implementation

Technical CI knowledge

Skill/capability

Requirement

Begin Build Embed

Focus on change management

Focus on project management

Focus on technical improvement

High

Medium

Low

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Stage 1 (begin) CI infrastructure – organisation size and structure

Typical size

Team size equivalent to approx 0.5 - 1% of manufacturing personnel

1-3 change agents with 1 –2 consultants per pilot area

Explanation of each roleTypical structure of CI organisation

Group

Plant Manager

Ops External support

Line Line Model line

Change agents

Push

External support is required for technical advice and as a driving force for change. This group (often consultants) works with the operations organisation and plant manager to manage the implementation. It also works hand-in-hand with the change agents to implement change

A small group of change agents newly created for the transformation, work with external support in the pilot area to make change happen

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Stage 2 (build) CI infrastructure – organisation size and structure

1 internal consultant per 2-4 plants covered

1 external consultant per 2-4 internal consultants

0.25-0.5% of plant workforce

1-3 change agents per deployment area

Typical sizeExplanation of each roleTypical structure of CI organisation

Group

Plant Manager

Ops

Group CI team

External support

Push

Plant CI team

Push

Line Line Line

Change agents

Change agents

Push Push

Change agents

New group-level CI team created to act as internal consultants. Trained by the external support group they gradually take over their role

External support now advises the new group and plant CI teams in deployment

New plant-level CI team created to drive plant-wide deployment through operations

Change agent teams expanded to cover implementation across several deployment areas

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Stage 3 (embed) CI infrastructure – organisation size and structure

1 internal consultant per 2-4 plants covered

Team of 1-2 for area of 100 shop floor workers

*Assumes plant size of up to 500 people

Group

Plant Manger

Ops

Group CI team

Pull

Plant CI team

Pull

Line Line Line

Improve-ment team

Improve-ment team

Pull Pull

Improve-ment team

Typical sizeExplanation of each roleTypical structure of CI organisation

Group CI team strengthened to support company-wide activity. External support no longer required

Plant CI team coaches operations as requested to meet their targets. No external support, but can draw on group CI consultants for advice

0.25-0.5% of plant workforce

Improvement teams replace change agents. They report directly to the operations function and help facilitate practical CI activity

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• March-June 2004

Lead time and

productivity leadership

• Feb-Oct/Nov, 2003Timing • Nov–Feb, 2003

Complete implementation in Sandviken and initiate global roll-out initiated

Phase 3Training program

Drive pilots and build capability/ competence

Scale-up in Sandviken and institutionalize production capability

Phase 1Phase 2

Drive full global roll-out

Phase 4

• July-Dec 2004

• 6 units• 90–100% of

Sandviken

• 6 units/flows*• 30% of Sandviken

site

Scope • 6 units**• 70% of Sandviken

site

• 6–9 units• 100% of Sandviken

site

"Full results in Sandviken and global roll-out

started"

"It is possible""You have the

internal capabilities"

"Full results-new performance

level"

"What does it mean"

Product Areas fully in charge

The CEO of Sandvik Materials Technology is ambitiously investing in rapid corporate deployment of production system transformation

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The build phase has been reached within the first 6 months

Core activity Criterion Begin Build Embed

Building capability

Sourcing of CI knowledge

Consultancy and recruitment

Recruitment, some consultancy

Develop in-house expertise

Resourcing of training

Consultancy Grow in-house (plant-based)

Grow in-house (corporate-based)

Reinforcement of behaviour

Change agent/shadow reinforces

Change agent/shadow reinforces

Line reinforces, CI functions as adviser

Supporting implementation

Driving of improvement

CI function drives CI function drives through the line

Line drives, advised by CI function

Management of programme

Project management Strong project management/ deployment

Devolved line kaizen

Developing methodology

Targeting of improvement vision

Top-down, step change vision for pilot area

Top-down, step change vision for deployment area

Incremental, based on technical limits, ‘ideal state’ vision

Prescriptive, standardised methodology

Prescriptive, standardised methodology

Principle-based, adaptive methodology

Codification of methodology

Few tools, focussed on high priorities

Few tools, focussed on high priorities

Broader toolkit, more advanced tools

Selection of toolkit

McKinsey will lead 6 pilot transformations

The flow transformation approach has been standardised and training is being developed

Six full-time “production system designers” are being trained

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Agenda

•Context


•Organisation


•Next steps

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Transformation compendium

Purpose

• To help CSTs and clients prepare transformation plans to reach the end state

Example issues to be addressed

• Given diagnostic result, what are the immediate priorities for the business?

• Which performance review should start first?• What materials can be used to help coach

leaders of reviews?• What are the implementation stages for initial

shop floor performance reviews?

Case study• To provide a complete

client example from diagnosis to implementation

• What did client’s diagnosis look like?• What was the end-state vision?• How was a stretching, realistic

implementation plan created?• What tools were used when implementing?• What lessons were learned by the client?

Example materials to be developed in the next phase

How to video• To provide a role model

for conducting performance reviews

• How does a good leader create the right flow and flavour in a performance review?

• What helped him/her achieve this?

Client document

• Client-ready document that introduces concepts and design/ implementation process

All of the above

McKinsey Management Infrastructure

Documents

Transcript of McKinsey Management Infrastructure